Yes, you can buy shares in a company that has filed for bankruptcy. The shares are a fraction of what they once were. So buy them.

I think I would 'pump and dump' the shares though. I wouldn't look at it as a long term investment. A day by day strategy or week by week at the most. If you had bought the stocks yesterday, you would be up 20% right now and that is only with a 2.5 cent rise in the stock.

There is some disturbing news about the company though. $1.5 billion in debt, a new CEO, new restructuring expert, and there is no news of either an outright sale of the company or a merger with another company. They are trying to deal with their creditors right now but still no word about it either.

Did I mention they are 1.5 billion in debt? How could they pay that off without either selling the company outright or merging? They couldn't. But if they find either one of those, the stock would soar overnight. It is worth the risk in my opinion.

Buying the stock of companies in bankruptcy is one of the fastest ways to lose your money. Honestly you would have a better chance if you took the money you were going to invest in that stock and buying scratch tickets. Or even better yet, buying a shit ton of oranges and selling them by the freeway. The company is bankrupt for a reason, and it is not because of good management and a sound business model.

Honestly the big problem is that a company going through bankruptcy is restructuring or shutting down. Either way the debt holders get first crack at assets, then the preferred stock holders, then the common stock holders (you).

I agree with bfellow, It is a very bad idea to buy the stocks of companies going through BK. I am a day trader of 20 years and am willing to take great risks, but I won't buy BK stocks. Instead I would focus on stocks that are near BK and try to day or swing trade then. A swing trade is a trade of 2-7 days. The banks like CITI and Bank of america. have been good to me. Kust don't put all your eggs in one basket.

One final note, we have had a pretty good runup lately in the stockmarket. If you want to go long I would wait for a pullback, or better yet buy some puts on stocks that are over extended.

I'm with the rest... I have bought stock in bankruptcy...NOT recommended.

Anyone remember Creative Labs number one sound card competitor 20 years ago? I thought they would kick their ass... instead (I kept buying even when in bankruptcy) I lost one of my asses. I WAS even in this hardware Industry and was SOOOoooo wrong.

You can actually try to find out such companies which have sound business model but are bankrupt only due to current economic situation.
Finding out might be difficult but definitely worth.Posted via Mobile Device

You can also try to buy the stock once the company emerges from bankruptcy. I know that Kmart was an excellent buy once it emerged from BK court.

I also agree with ISLAND in that there have been good companies that have knocked down too far because of the overall economy. I would look at a Merck or GE ans good examples. I recently made some good money on a bounce in Fedex stock.

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